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Will the ASX 200 break its 13-week trading range?

Will the ASX 200 break its 13-week trading range?

After a huge week of Australian corporate reporting, investors are still concerned about an increasingly unpredictable Trump Administration. This dilemma begs the question: will the ASX break the 5800 to 5675 range? (This video was produced in commercial partnership between Fairfax Media and IG Markets.)

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Barclay's chief economist Kieran Davies said the Australian housing market was "very expensive". Prices were at or near record highs when assessed by key metrics, he said. "He [Mr Stevens] is just making it clear to buyers, particularly investors, that they should be careful in how much debt they take on," Mr Davies said.

The International Monetary Fund last month also said Australian houses were among the most expensive in the world when compared with both household incomes and rents, two common ways of valuing property.

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Despite his warning on the property market, Mr Stevens said the Reserve Bank did not think there was a case to raise interest rates to prevent the market overheating.

"If the next couple of years saw an unremarkable performance on prices, and construction staying at the higher levels that will clearly be reached over the coming year, it would be an outcome that would contribute to a balanced growth path for the economy and to housing more people at manageable cost," Mr Stevens said.

The comments come after Mr Stevens this week left the official interest rate at a record low 2.5 per cent – where markets expect it will stay for the rest of this year.

The Reserve Bank also believes the Australian dollar is set to plunge, "and not by just a few cents".

At US94¢ to the dollar, Australia's current exchange rate was far too high, he said.

"Lest there be any uncertainty about this, let me be clear, again, that the exchange rate remains high by historical standards," Mr Stevens told the conference. "When judged against current and likely future trends in the terms of trade, and Australia's still high costs of production relative to those elsewhere in the world, most measurements would say it is overvalued, and not by just a few cents."

Following his comments, the currency dropped about US0.5¢ to US93.92¢

Mr Stevens' comments come as warm weather and poor consumer confidence battered local retail sales, which notched a 0.5 per cent fall in turnover for May.

The Australian Bureau of Statistics figures, released on Thursday, showed that Victoria recorded the biggest fall of 1.1 per cent. NSW was next with a fall of 0.5 per cent. Among the categories, department stores fell 2.6 per cent; clothing, footwear and personal accessories fell 2.3 per cent; household goods fell 0.9 per cent; and other retailing fell 0.4 per cent. There was a 0.1 per cent rise in food retailing and a 0.1 per cent rise in cafes, restaurants and takeaway food.